Cross-Exchange Spread Arbitrage
The same asset often trades at slightly different prices on different exchanges. We buy where it is cheaper, sell where it is dearer, and close both sides when the prices converge. Returns come from the spread itself, not from calling market direction.
In one minute: the return is the gap between two prices
Assets such as SanDisk (SNDK) stock perpetuals, gold and bitcoin trade on dozens of exchanges at once. Each venue has its own traders, trading hours and rules, so prices briefly drift apart. The gaps are usually only 0.1% to 0.3%, but they appear hundreds or thousands of times a day.
One asset, prices on two exchanges
Illustration. The shaded band is the gap between the two prices, enlarged for readability. The price rises about 6% overall, but the long and short legs offset each other, so the arbitrage return is unaffected.
A worked example
Illustrative numbers| Buy on exchange A at 100.00 | $10,000 |
| Sell on exchange B at 100.30 | $10,000 |
| Spread at entry | 30 bp |
| Spread at exit | 5 bp |
| Spread captured | +25 bp ≈ +$25 |
| Fees and other costs | −10 bp ≈ −$10 |
| Net profit on this round | +15 bp ≈ +$15 |
bp means basis point; 1 bp = 0.01%. Each trade is small, but the system completes about 900 such rounds a day on average, and returns build up through frequency.
Find the spread
Every 10 seconds the system scans quotes across the whole market and keeps only spreads that still pay after fees.
Open both legs at once
Buy the cheaper side and sell the dearer side in equal size. When the price moves up or down, one leg gains what the other loses.
Close on convergence
When the spread returns to normal, both legs close together and the difference is locked in. The whole process is automated, with no discretionary calls.
Spread convergence
The spread narrows between entry and exit, and the narrowing is the profit.
Funding
Perpetual contracts settle funding between longs and shorts every few hours. We prefer to hold the side that receives it.
Trading rebates
At our trading volume, exchanges return a share of the fees paid, which offsets part of the cost.
Four months of live trading
All figures come from live trading accounts. Our own ledger records every fill, fee, funding payment and rebate, then combines 19 live accounts. Returns are realized only and exclude unrealized gains or losses on open positions.
Cumulative return and drawdown
From 2026-06-30 21:30 to 2026-10-27 14:45 (UTC+8)The grey area (before August 13) is estimated from cumulative profit and deployed capital at the time; after that, every day is reconciled. Drawdown is the fall from the previous NAV peak.
Monthly returns
Monthly change in realized NAVThe hatched bar (July) is estimated, as is August 1–12. October runs through the 27th.
Daily returns
Reconciled daily from August 13Scale and activity
Capital index
August 5 = 100, dailyOf every 100 in gross income, about 61 is kept as net profit
Breaking down every entry since June 30: about two-thirds of gross income comes from spread convergence and one-third from funding. Trading fees are the largest cost, and rebates recover part of them.
Return breakdown
Gross income = 100- Fees take about 46% of gross income. Fee tiers and rebates drive profit directly, and the cost advantage grows with trading volume.
- Funding contributes one-third. Positions favour the side that receives funding, so they earn while held.
- Net profit per round is typically 7 to 31 bp (median by account). The strategy does not chase large single wins; it compounds steady, frequent ones.
- Long and short legs stay hedged. Net exposure is about 0.08%, so returns barely depend on whether prices rise or fall.
Scanning the whole market, capital follows the opportunity
We arbitrage spreads across the whole market, with no fixed list of instruments. The system continuously scans perpetuals, spot and equity products on every connected exchange, and capital goes wherever the spread after costs is best.
Representative instruments traded live
Examples only. US and Korean stock perpetuals keep trading 24 hours a day while the underlying market is closed, which is where spreads concentrate. New listings join the scan automatically.
US equities
Stock perpetuals that trade while the stock market is closed
Korea and China A-shares
Leading memory chip makers, including ADRs and new listings
Private companies
Pre-IPO perpetuals, with the widest spreads soon after listing
Commodities
Perpetuals tracking futures and spot prices
Crypto assets
The most liquid major coins
Everything else
Other assets in the scan
Profit contribution
By strategy book, share of cumulative net profitThe market-wide rotation book allocates capital across all instruments in one account based on live opportunity; the others are single-instrument books.
Annualized return by account
Each dot is one live accountAll 19 accounts are positive, with a median of 27%. Short-lived accounts show more variable annualized figures, which depend on the instruments and the period traded.
Why spreads keep appearing
Spreads come from market structure, not a passing anomaly. As long as one asset is priced separately in many markets, someone has to bring those prices together.
Mismatched trading hours
US and Korean stocks trade only during market hours, while perpetuals never stop. News and related markets keep moving while the stock market is closed, so each exchange has to price on its own.
Fragmented markets
One asset is spread across many exchanges with separate order books, index methods and margin rules, and no common clearing to align prices.
Volatility widens spreads
Earnings, macro data and sudden events move prices sharply. Markets react at different speeds, so spreads widen and opportunities cluster.
A steady stream of new listings
New stock, commodity and pre-IPO perpetuals keep launching. Liquidity is scattered early on and spreads are widest, so each new instrument brings a fresh round of opportunity.
Built in-house, running around the clock
Market data, order execution, accounting and risk control all run on a trading system the team built itself. People set strategy parameters, grant authorizations and handle exceptions.
Market data
- 12 exchanges, about 8,000 quote series
- Market-wide spreads scanned every 10 seconds
- Funding rates refreshed every 30 seconds
Decision
- Thresholds set on spread net of costs
- Parameters tested by replaying historical data
- Size added gradually after small live tests
Execution
- Many exchanges and accounts in parallel
- Both legs ordered together
- Single-leg fills completed or unwound automatically
Ledger and risk
- Every fill, fee, funding payment and rebate recorded
- Leg exposure and margin checked in real time
- Alerts pushed to the on-call team immediately
Hedge guardrails
Leg quantities are checked continuously; if residual exposure exceeds its limit, new entries stop and the gap is resolved.
Tiered margin monitoring
Alerts are graded by margin usage and distance to liquidation price, and the on-call team acts on them promptly.
Account segregation
Each strategy and each client has its own accounts and ledger, with separate limits and permissions.
Verifiable ledger
Returns are computed from trade-by-trade records, each traceable to the exchange's original receipt.
24/7 on call
Data delays, system faults and risk events are pushed to the on-call channel immediately.
Gradual scaling
Backtest, small live test, then step-by-step sizing; instruments whose edge fades are retired.
Your capital stays in your own account
Clients can connect a Gate exchange account held in their own name. Funds never move to our accounts, and you keep ownership and control of the account. Within the agreed authorization, we run the strategy, monitor risk and provide accounting reports.
How to connect
Open an account
Create a trading sub-account under your own Gate account. You manage login and security verification yourself.
Grant access
Enable trading permissions as agreed, with no withdrawal permission required, and whitelist our server IPs.
Separate accounting
You get your own ledger, with daily NAV, profit and fee records available at any time.
Risks to understand before investing
- Spreads can keep widening, causing unrealized losses while positions are open.
- When the two legs fill at different times, brief one-sided exposure and slippage can occur.
- Funding can turn from income into a cost.
- Assets are held at exchanges, so exchange operations, risk controls and outages can affect their safety.
- In extreme markets, individual positions may be liquidated.
- Past performance does not guarantee future returns; opportunity varies with market conditions.
Frequently asked questions
What is a perpetual contract?
A contract with no expiry that tracks an underlying asset and can be held long or short. Exchanges use funding payments to keep its price close to spot.
What is funding?
A payment settled between longs and shorts every 1 to 8 hours. When the contract trades above spot, longs pay shorts; when below, shorts pay longs.
What does bp mean?
A basis point: 1 bp = 0.01%. So 30 bp is 0.3%, or $30 on a $10,000 position.
How is the 32.4% annualized return calculated?
Cumulative realized profit divided by the time-weighted average of deployed capital, scaled to one year. Because capital has changed over time, this differs from cumulative return ÷ days × 365.
What does the 0.84% maximum drawdown mean?
The largest fall from a NAV peak was 0.84%. It is measured on the realized return curve and excludes unrealized gains or losses on open positions.
Will returns stay at this level?
There is no guarantee. Opportunity changes with volatility and competition: more when markets are volatile or new instruments list, less when markets are calm.
Let's talk
For partnership details or fuller ledger verification materials, please contact the person who shared this page with you, and we will arrange a call or meeting.